C.H. Robinson Worldwide, Inc.
14701 Charlson Road
Eden Prairie, Minnesota 55347
Chad Lindbloom, senior vice president and chief financial officer (952) 937-7779
Angie Freeman, investor relations (952) 937-7847
FOR IMMEDIATE RELEASE
C.H. ROBINSON REPORTS FOURTH QUARTER RESULTS
MINNEAPOLIS, January 29, 2008 - C.H. Robinson Worldwide, Inc. ("C.H. Robinson") (NASDAQ: CHRW), today reported financial results for the quarter ended December 31, 2007.
Summarized financial results for the quarter ended December 31 are as follows (dollars in thousands, except per share data):
| Three months ended December 31, | | Twelve months ended December 31, |
| 2007 | 2006 | % Change | | 2007 | 2006 | % Change |
| | | | | | | |
Gross revenues | $1,952,022 | $1,642,591 | 18.8% | | $ 7,316,223 | $6,556,194 | 11.6% |
Gross profits | 322,754 | 278,522 | 15.9% | | 1,243,778 | 1,082,544 | 14.9% |
Operating income | 132,873 | 110,375 | 20.4% | | 509,684 | 417,845 | 22.0% |
Net income | 85,254 | 71,827 | 18.7% | | 324,261 | 266,925 | 21.5% |
Diluted EPS | $ 0.49 | $ 0.41 | 19.5% | | $ 1.86 | $ 1.53 | 21.6% |
Total Transportation gross profits increased 17.0 percent to $288.0 million in the fourth quarter of 2007 from $246.2 million in the fourth quarter of 2006. Our Transportation gross profit margin decreased to 17.7 percent in 2007 from 18.3 percent in 2006 due to gross profit margin declines in several of our transportation modes.
In our North American truck business, our volume growth approximated our gross profit growth of 16.4 percent in the fourth quarter of 2007. Our gross profit margins declined slightly. Inclusive of fuel, our truckload rates increased approximately 3 percent; excluding estimated impacts of fuel, rates decreased approximately 3 percent.
Our intermodal gross profit decrease of 4.3 percent in the fourth quarter was due to a decline in our gross profit margins, partially offset by an increase in volumes. Our gross profit margin decline was due to a change in our mix of business from higher-margin, transactional opportunities to more contractual intermodal business.
The increase of 24.4 percent in our ocean transportation gross profits in the fourth quarter of 2007 was driven by volume growth. Our air transportation gross profit growth of 64.6 percent in the fourth quarter of 2007 includes approximately $1.3 million of domestic air gross profits from our previously-disclosed acquisition of LXSI Services Inc. on July 13, 2007. Our international air business had significant volume growth in all regions, especially Asia.
Miscellaneous transportation gross profits consist primarily of transportation management fees and customs brokerage fees. The increase of 14.4 percent in the fourth quarter was driven by an increase in our transportation management business, offset by a decline in our customs business. Our customs brokerage gross profits declined due to a decrease in our fee per transaction, offset in part by an increase in our transaction volumes.
For the fourth quarter, Sourcing gross profits increased 5.9 percent to $23.1 million in 2007 from $21.8 million in 2006. We continued to have success growing our business with retailers and foodservice providers. Our gross profit margin declined primarily because of higher prices for certain commodities, related to weather and higher labor and fuel costs.
Our Information Services gross profits grew 10.9 percent in the fourth quarter of 2007. Our growth was driven primarily by volume growth in our core fuel card and cash advance services. In addition, our revenue per transaction was up slightly due to the price of fuel. With certain merchants our fee is based on a percentage of the sale amount. Approximately one-third of the growth was related to other services, such as fleet card and carrier compliance services.
For the fourth quarter, operating expenses increased 12.9 percent to $189.9 million in 2007 from $168.1 million in 2006. This was due to an increase of 11.9 percent in personnel expenses and an increase of 16.4 percent in selling, general and administrative expenses.
As a percentage of gross profits, total operating expenses decreased to 58.8 percent in the fourth quarter of 2007 from 60.4 percent in the fourth quarter of 2006. This decrease was due to a decline in personnel expenses as a percentage of gross profits from 46.4 percent to 44.8 percent, offset by a slight increase in our selling, general and administrative expenses as a percentage of gross profits. Expenses related to our restricted stock program and various other incentive plans are variable, based on growth in our earnings. Our slower earnings growth in the fourth quarter of 2007 compared to the fourth quarter of 2006 resulted in a decrease in expense related to some of these incentives plans. This contributed to our personnel expenses growing slower than our gross profits.
Our selling, general, and administrative expenses grew faster than our gross profits, due primarily to increases in our legal, travel, and occupancy expenses.
Founded in 1905, C.H. Robinson Worldwide, Inc., is one of the largest non-asset based third party logistics companies in the world. C.H. Robinson is a global provider of multimodal transportation services and logistics solutions, currently serving over 29,000 customers through a network of 218 offices in North America, South America, Europe, and Asia. C.H. Robinson maintains one of the largest networks of motor carrier capacity in North America and works with approximately 48,000 carriers worldwide.
Except for the historical information contained herein, the matters set forth in this release are forward-looking statements that represent our expectations, beliefs, intentions or strategies concerning future events. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience or our present expectations, including, but not limited to such factors as market demand and pressures on the pricing for our services; competition and growth rates within the third-party logistics industry; freight levels and availability of truck capacity or alternative means of transporting freight, and changes in relationships with existing truck, rail, ocean and air carriers; changes in our customer base due to possible consolidation among our customers; our ability to integrate the operations of acquired companies with our historic operations successfully; risks associated with litigation and insurance coverage; risks associ ated with operations outside of the U.S.; risks associated with the produce industry, including food safety and contamination issues; changing economic conditions such as general economic slowdown, decreased consumer confidence, fuel shortages and the impact of war on the economy; and other risks and uncertainties detailed in our Annual and Quarterly Reports.
Conference Call Information:
C.H. Robinson Worldwide Fourth Quarter 2007 Earnings Conference Call
Tuesday, January 29, 2008 5:00 p.m. Eastern time
Live webcast available through Investor Relations link at www.chrobinson.com
Telephone access: 800-240-2134
Webcast replay available through February 11, 2008; Investor Relations link at www.chrobinson.com
Telephone audio replay available until 12:59 a.m. Eastern Time on February 1, 2008: 800-405-2236;
passcode: 11105696#
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
(unaudited) |
(In thousands, except per share data) |
| | | |
| Three months ended December 31, | | Twelve months ended December 31, |
| 2007 | | 2006 | | 2007 | | 2006 |
Gross Revenues: | | | | | | | |
Transportation | $ 1,622,533 | | $1,347,413 | | $ 5,971,784 | | $ 5,321,547 |
Sourcing | 317,799 | | 284,638 | | 1,298,913 | | 1,192,297 |
Information Services | 11,690 | | 10,540 | | 45,526 | | 42,350 |
Total gross revenues | 1,952,022 | | 1,642,591 | | 7,316,223 | | 6,556,194 |
Gross Profits: | | | | | | | |
Transportation | | | | | | | |
Truck | 248,442 | | 213,375 | | 949,277 | | 822,954 |
Intermodal | 9,209 | | 9,620 | | 38,670 | | 36,176 |
Ocean | 11,924 | | 9,587 | | 43,530 | | 37,150 |
Air | 9,361 | | 5,686 | | 31,315 | | 21,533 |
Miscellaneous | 9,027 | | 7,892 | | 35,240 | | 28,152 |
Total transportation | 287,963 | | 246,160 | | 1,098,032 | | 945,965 |
Sourcing | 23,101 | | 21,822 | | 100,220 | | 94,229 |
Information Services | 11,690 | | 10,540 | | 45,526 | | 42,350 |
Total gross profits | 322,754 | | 278,522 | | 1,243,778 | | 1,082,544 |
| | | | | | | |
Operating costs and expenses: | | | | | | | |
Personnel expenses | 144,486 | | 129,146 | | 567,986 | | 515,947 |
Selling, general, and administrative expenses | 45,395 | | 39,001 | | 166,108 | | 148,752 |
Total operating expenses | 189,881 | | 168,147 | | 734,094 | | 664,699 |
Income from operations | 132,873 | | 110,375 | | 509,684 | | 417,845 |
| | | | | | | |
Investment and other income | 3,337 | | 3,330 | | 13,830 | | 11,843 |
| | | | | | | |
Income before provision for income taxes | 136,210 | | 113,705 | | 523,514 | | 429,688 |
Provision for income taxes | 50,956 | | 41,878 | | 199,253 | | 162,763 |
Net income | $ 85,254 | | $ 71,827 | | $ 324,261 | | $ 266,925 |
| | | | | | | |
Net income per share (basic) | $ 0.50 | | $ 0.42 | | $ 1.90 | | $ 1.56 |
Net income per share (diluted) | $ 0.49 | | $ 0.41 | | $ 1.86 | | $ 1.53 |
Weighted average shares outstanding (basic) | 169,591 | | 170,555 | | 170,493 | | 170,888 |
Weighted average shares outstanding (diluted) | 174,269 | | 174,104 | | 174,040 | | 174,787 |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(unaudited) |
(In thousands) |
|
| | December 31, 2007 | | December 31, 2006 |
| | |
Assets | | | | |
Current assets: | | | | |
Cash and cash equivalents | | $ 338,885 | | $ 348,592 |
Available-for-sale securities | | 115,842 | | 124,767 |
Receivables, net | | 911,780 | | 764,995 |
Other current assets | | 22,649 | | 17,794 |
Total current assets | | 1,389,156 | | 1,256,148 |
| | | | |
Property and equipment, net | | 101,665 | | 82,071 |
Intangible and other assets | | 320,486 | | 293,474 |
| | $ 1,811,307 | | $ 1,631,693 |
| | | | |
Liabilities and stockholders' investment | | | | |
Current liabilities: | | | | |
Accounts payable and outstanding checks | | $ 618,195 | | $ 540,129 |
Accrued compensation | | 101,926 | | 98,408 |
Other accrued expenses | | 37,498 | | 48,412 |
Total current liabilities | | 757,619 | | 686,949 |
| | | | |
Long term liabilities | | 11,439 | | 1,022 |
Total liabilities | | 769,058 | | 687,971 |
| | | | |
Total stockholders' investment | | 1,042,249 | | 943,722 |
| | $ 1,811,307 | | $ 1,631,693 |
| | | | |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) (In thousands, except operational data) |
| Twelve months ended December 31, |
|
| 2007 | | 2006 |
Operating activities: | | | |
Net income | $ 324,261 | | $ 266,925 |
Stock-based compensation | 38,002 | | 47,292 |
Depreciation and amortization | 27,366 | | 23,932 |
Other non-cash expenses, net | 199 | | (1,718) |
Net changes in operating elements | (81,398) | | 6,946 |
Net cash provided by operating activities | 308,430 | | 343,377 |
| | | |
Investing activities: | | | |
Net property additions | (43,713) | | (41,543) |
Cash paid for acquisitions | (22,220) | | (39,724) |
Purchases of available-for-sale securities | (204,020) | | (119,864) |
Sales/maturities of available-for-sale securities | 214,299 | | 118,838 |
Other assets, net | (68) | | 1,056 |
Net cash used for investing activities | (55,722) | | (81,237) |
| | | |
Financing activities: | | | |
Net repurchases of common stock | (153,582) | | (67,086) |
Excess tax benefit from stock based compensation plans | 16,667 | | 12,078 |
Cash dividends | (125,183) | | (90,837) |
Net cash used for financing activities | (262,098) | | (145,845) |
Effect of exchange rates on cash | (317) | | 1,669 |
| | | |
Net change in cash and cash equivalents | (9,707) | | 117,964 |
Cash and cash equivalents, beginning of period | 348,592 | | 230,628 |
Cash and cash equivalents, end of period | $ 338,885 | | $ 348,592 |
| | | |
| | | |
| As of December 31 |
| 2007 | | 2006 |
Operational Data: | | | |
Employees | 7,332 | | 6,768 |
Branches | 218 | | 214 |
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